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Education Licensing Your Invention Brand Extensions Thrive in Food
Education Licensing Your Invention Brand Extensions Thrive in Food | Brand Extensions Thrive in Food |
Page 1 of 2 By Kirk Martensen Brand extension is less risky than creating a new brand and can generate consumer trial and sales faster. Brand extension products are also less likely than traditional line extensions to cannibalize sales of the original brand. In fact, extending a brand into new categories may actually intensify the brand image and enhance the brand equity. While there are many benefits to brand extension licensing, there is also the risk of diluting the brand image or brand equity. For this reason, it is important to carefully plan and manage the licensing program by creating controls and processes to minimize this risk. The licensor should consider a variety of market trends when evaluating brand extensions: consolidation; demographic changes and emphasis on “perimeter” department categories. Consolidation Is Changing the Packaged Goods Industry There have been numerous food manufacturer mergers to counter the purchasing clout of recent supermarket consolidations . The top five chains account for over 38% of U.S. supermarket sales, and Kroger’s sales (at $49 billion) are equivalent to nearly 13 % of total U.S. supermarket sales. There has also been dramatic consolidation on the manufacturer side, with over 1,000 mergers and acquisitions since 1997. It’s a long list.
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